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1 Services Stock to Own for Decades and 2 We Ignore
Business services providers thrive by solving complex operational challenges for their clients, allowing them to focus on their secret sauce. But cutbacks in corporate spending and the threat of new AI products have kept sentiment in check, and over the past six months, the industry’s 2.3% return has trailed the S&P 500 by 7.6 percentage points.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. With that said, here is one services stock poised to generate sustainable market-beating returns and two that may face trouble.
Two Business Services Stocks to Sell:
Knowles (KN)
Market Cap: $1.82 billion
With roots dating back to 1946 and a focus on components that must perform flawlessly in critical situations, Knowles (NYSE:KN) designs and manufactures specialized electronic components like high-performance capacitors, microphones, and speakers for medical technology, defense, and industrial applications.
Why Do We Think KN Will Underperform?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 3.7% annually over the last five years
- Subscale operations are evident in its revenue base of $573.5 million, meaning it has fewer distribution channels than its larger rivals
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 5.3% annually
At $21.43 per share, Knowles trades at 17.8x forward P/E. Check out our free in-depth research report to learn more about why KN doesn’t pass our bar.
Interface (TILE)
Market Cap: $1.63 billion
Pioneering carbon-neutral flooring since its founding in 1973, Interface (NASDAQ:TILE) is a global manufacturer of modular carpet tiles, luxury vinyl tile (LVT), and rubber flooring that specializes in carbon-neutral and sustainable flooring solutions.
Why Is TILE Not Exciting?
- Sales trends were unexciting over the last five years as its 3.3% annual growth was below the typical business services company
- Projected sales growth of 4.4% for the next 12 months suggests sluggish demand
- Earnings per share lagged its peers over the last five years as they only grew by 6.2% annually
Interface’s stock price of $27.95 implies a valuation ratio of 14.1x forward P/E. To fully understand why you should be careful with TILE, check out our full research report (it’s free for active Edge members).
One Business Services Stock to Buy:
Cintas (CTAS)
Market Cap: $75.2 billion
Starting as a family business collecting and cleaning shop rags in Cincinnati, Cintas (NASDAQ:CTAS) provides corporate identity uniforms, facility services, and safety products to over one million businesses across North America.
Why Will CTAS Beat the Market?
- Annual revenue growth of 9.3% over the last five years was superb and indicates its market share increased during this cycle
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- CTAS is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Cintas is trading at $188.07 per share, or 36.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.